Supreme Court: In a batch of appeals filed by TATA Motors Limited (‘TATA Motors’), EVEY Trans Pvt. Ltd. (‘EVEY’), challenging the Order of High Court of Bombay, the Three- Judge Bench comprising of Dr. DY. Chandrachud, PS Narasimha and J.B. Pardiwala* J., dismissed the TATA Motors appeal and allowed the appeals filed by EVEY and Brihan Mumbai Electric Supply and Transport Undertaking. The Court set aside the part of High Court’s judgment and Order wherein, the decision of BEST to accept the tender of EVEY was set aside.
A tender was floated by Brihan Mumbai Electric Supply and Transport Undertaking (‘BEST’) for the supply, operation and maintenance of 1400 (+50 percent variation) Single Decker AC Electric Buses with driver, for the purpose of public transport service within the city of Mumbai along with other civil infrastructure development at the BEST depots for a period of 12 years. In all, eight market players participated in the Tender process, including EVEY Trans Pvt. Ltd. (‘EVEY’) and TATA Motors. In the pre-bid meeting held on 11-03-2022, TATA Motors submitted its pre-bid points, wherein, it requested BEST to consider its bid for 200 Kms per day with 75-minutes of opportunity charging time during the day operations and range testing conditions.
BEST revised certain specifications, however, the modifications as requested by TATA Motors were rejected. BEST opted for a specific reference to “in actual conditions” and excluded any reference to “AIS 040” or “Standard Conditions” in the Tender specifications.
TATA Motors submitted its bid on 25-04-2022, wherein it guaranteed operating range of 200 Kms with 80% State of Charge (‘SoC’) (i.e. 20% reserve left upon running 200 Kms in single charge), however, the same was achieved “in standard test conditions as per AIS 040”. This was a deviation from the Tender specifications.
EVEY submitted its bid on 02-05-2022, claiming that the same was submitted without any deviation from the Tender conditions including the condition of minimum operating range of 200 Kms in a single charge.
The Tender bids were opened on 04-05-2022. BEST in its technical suitability evaluation dated 06-05-2022, held TATA Motors along with four other bidders, to be “technically non-responsive”. TATA Motor’s bid was rejected on account of technical deviation with respect to the operating range in its Annexure F and Annexure Y, respectively. The bid offered by EVEY in the said report was deemed to be “technically responsive”.
Aggrieved by the technical suitability evaluation issued by BEST by which it rejected the bid of TATA Motors, the latter approached the High Court. During the pendency of the aforesaid writ petition BEST awarded the Tender in favour of EVEY with the Letter of Acceptance dated 20-05-2022.
The High Court vide its impugned order took the view that the requirement for the operating range to be more than 200 Kms in a single charge in actual conditions was unambiguous. Accordingly, the High Court upheld the disqualification of TATA Motors and rejected their claim from being considered as an eligible bidder as they failed to comply with the technical requirements of the Tender.
The High Court also held that the email sent by EVEY dated 06-05-2022 ought not to have been entertained, and the technical bid evaluation, which was released on the same day did not depict fairness in the actions of BEST. Therefore, the High Court declared EVEY also as an unsuccessful bidder.
Thus, aggreieved by the said Order of the High Court, all the three parties had preferred the present appeal before the Court with their respective petitions.
Analysis and Court’s Decision
It is pertinent to note that during the pendency of the proceedings before the High Court and after submitting the subsidy guarantee, EVEY had already supplied total 8 buses between 04.07.2022 to 05.07.2022. However, this Court by an interim order dated 14.07.2022 granted an interim stay of the impugned judgment insofar as EVEY is concerned. This Court observed that, the supply of the buses, if any, by EVEY would be subject to the result of these petitions and EVEY shall not claim any equity at a later stage.
Whether the High Court after upholding the disqualification of TATA Motors from the Tender was justified in undertaking further exercise to ascertain whether EVEY also stood disqualified and that BEST in its discretion may undertake a fresh tender process?
The Court said that being the guardian of fundamental rights it was duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. Further, the Court said that the Courts must realise their limitations and the havoc which needless interference in commercial matters can cause.
It was also said that “in contracts involving technical issues the Courts should be even more reluctant because most of us in Judges’ robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The Courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give ‘fair play in the joints’ to the government and public sector undertakings in matters of contract. The Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer”.
The Court said that it was not in dispute that the first and the foremost requirement of the Tender was the prescribed operating range of the single decker buses which would operate for around and average of 200 Kms in a single charge in “actual conditions” with 80 percent SoC without any interruption. The Court noted that the TATA Motors in its bid deviated from this requirement and had informed BEST that it could carry the operating range in the “standard test conditions” which was not in accordance with the Tender conditions. Therefore, the High Court had rightly observed in its impugned judgement that the bid of the TATA Motors failed to comply with the said requirement and essential term of the Tender. However, the Court viewed that the High Court having once declared TATA Motors as “non-responsive” and having stood disqualified from the Tender process should not have entered into the fray of investigating into the decision of BEST to declare EVEY as the eligible bidder, because the High Court was not exercising its writ jurisdiction in public interest. Further, the Court said that the High Court looked into a petition filed by a party trying to assert its own rights. The Court referred to Raunaq International Ltd. v. I.V.R. Construction Ltd., wherein it was held that the grant of judicial relief at the instance of a party which does not fulfil the requisite criteria is something which could be termed as misplaced.
Further, the Court noted that Annexure Y was originally required to be submitted by the “Successful Bidder” after the evaluation of the bid. The Court said that the restriction on revision of documents under Clause 16 of Schedule I, which states, “No addition/correction, submission of documents will be allowed after opening of technical bid,” was only limited to the documents necessary to be included in the technical bid and would not be applicable to any such document which does not form a part of the technical bid.
The Court also viewed that the High Court should have been a bit slow and circumspect in reversing the action of BEST permitting EVEY to submit a revised Annexure Y relating to the Tender. Therefore, the Court said that the BEST committed no error or cannot be held guilty of favoritism, etc. in allowing EVEY to submit a revised Annexure Y as the earlier one was incorrect on account of a clerical error. Thus, this exercise itself was not sufficient to declare the entire bid offered by EVEY as unlawful or illegal.
The Court said that ordinarily, a writ Court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer unless something very gross or palpable is pointed out. The Court ordinarily should not interfere in matters relating to tender or contract. To set at nothing the entire tender process at the stage when the contract is well underway, would not be in public interest. Initiating a fresh tender process at this stage may consume lot of time and also loss to the public exchequer to the tune of crores of rupees. The financial burden/implications on the public exchequer that the State may have to meet with if the Court directs issue of a fresh tender notice, should be one of the guiding factors that the Court should keep in mind.
The Court referred to in Air India Ltd. v. Cochin International Airport Ltd., reported in (2000) 2 SCC 617, wherein the law relating to award of contract by the State and public sector corporations was reviewed and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the Court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should interfere.
Further, the Court referred to Jagdish Mandal v. State of Orissa and Others, (2007) 14 SCC 517, wherein, it was observed that while invoking power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluations of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters. If the decision relating to award of contract is bona fide and is in public interest, Courts will not interfere by exercising powers of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. Power of judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractual disputes.
Therefore, the Court set aside that part of the impugned judgment and order passed by the High Court by which the decision of BEST to accept the tender of EVEY was set aside and it was left to the discretion of BEST to undertake a fresh tender process. Further the appeal filed by TATA Motors was dismissed and the appeals filed by EVEY and BEST were allowed.
[TATA Motors Ltd. v. The Brihan Mumbai Electric Supply and Transport Undertaking, 2023 SCC OnLine SC 671, Decided on 19-05-2023]
Advocates who appeared in this case :
For TATA Motors: Senior Advocate Dr. Abhishek Manu Singhvi, Senior Advocate KV Vishvanathan, Senior Advocate Gopal Jain
For EVEY Trans: Senior Advocate Mukul Rohatgi, Senior Advocate Shyam Divan
For Brihan Mumbai Electric Supply and Transport Undertaking: Solicitor General of India Tushar Mehta
DSK Legal- Anjan Dasgupta (Partner), Rimali Batra (Associate Partner), Jash Shah (Senior Associate) and Abhishek Lalwani (Associate)
Judgment Authored by: Justice J.B. Pardiwala